By Tasos Dasopoulos
IOBE predicts 2.1% growth for 2024, with inflation falling but not below 3%, due to structural market problems and a slowdown in the reduction of the unemployment rate.
In its report for the first quarter of the year, IOBE considers that the economy starts the year with positive prospects, with the signal given by the large sums that the country expects from the Development and Resilience Fund (RDF) for 2024 and 2025 and the continued rise of Tourism. However, it is noted that there will also be challenges that will have to be faced in order for Greece to converge faster with the EU average.
According to the Institute, growth for this year was revised down to 2.1% from 2.3% forecast three months earlier, due to the unfavorable international economic climate. Of decisive importance for achieving the growth target will be the increase in investments, which is expected to reach 9.5%, and fixed investments, which are expected to increase by 7.8%, but also the increase in exports by 2 .2%. Based on the report, export growth would have been higher had we not had the economic slowdown in the Eurozone.
Faster convergence with the EU will require increased productivity, innovative investments in high value-added products and a well-functioning labor market where labor demand meets the corresponding supply from businesses.
Consumption
Private consumption is expected to remain positive for GDP in 2024 as well, recording an increase of 1.3%, while public consumption is expected to have a marginal decrease of 0.6%. In this matter, the General Director of IOBE, Nikos Vettas, referring to an exercise included in the report, noted that private consumption is also affected by the real incomes of households. He even noted that the minimum wage may have increased more than inflation, but it has also increased more than the average wage which has not followed the rise of the minimum wage. He also emphasized that in lower incomes the pressure of accuracy is significantly greater.
Inflation
Inflation is expected to decline, but not below 3% in 2024, from 4.2% in 2023, since, as Mr. Vettas pointed out, after the decline in energy prices, Greece will also have to solve its competitiveness problems of the internal market to see the price level deescalate more rapidly. Mr. Vettas also noted the fact that from the summer of 2023 and more so in the first months of 2024, price increases in Greece are higher than the Eurozone average.
The annual unemployment rate is expected to fall to 10.3% from 11.6% in 2023. Mr. Vettas stressed that structural problems in the labor market, such as proper training of the unemployed and participation in the market, should be resolved youth and women’s work, as pointed out by the international organizations that monitor the Greek economy.
